Semiconductor chips are seen on a circuit board of a computer in this illustration picture taken February 25, 2022. REUTERS
(Reuters) – U.S. President Donald Trump on Wednesday imposed a 25% tariff on certain AI chips, such as the Nvidia H200 AI processor and a similar semiconductor from AMD called the MI325X, under a new national security order released by the White House.
The proclamation follows a nine-month investigation under Section 232 of the Trade Expansion Act of 1962 and targets a number of high-end semiconductors meeting certain performance benchmarks and devices containing them for import duties. The action is part of a broader effort to create incentives for chipmakers to produce more semiconductors in the U.S. and decrease reliance on chip manufacturers in places like Taiwan.
“The United States currently fully manufactures only approximately 10 percent of the chips it requires, making it heavily reliant on foreign supply chains,” the proclamation said, adding that the reliance was a “significant economic and national security risk.”
The White House said in a fact sheet that the tariffs will be narrowly focused and will not apply to chips and derivative devices imported for U.S. data centers – a huge consumer of AI chips – startups, non-data center consumer applications, non-data center civil industrial applications and U.S. public sector applications.
Commerce Secretary Howard Lutnick has broad discretion to apply further exemptions, according to the proclamation.
Shares of Nvidia, AMD and Qualcomm traded slightly lower in after-hours trading.
Trump in December said he would slap tariffs on Chinese semiconductor imports over Beijing’s “unreasonable” pursuit of chip industry dominance, but delayed the action until June 2027.
That move followed a year-long “Section 301” unfair trade practices investigation into China’s exports of “legacy,” or older-technology chips to the U.S., launched by former President Joe Biden’s administration.
Questions had swirled around about the universe of products containing chips that would be hit by the tariffs, the tariff rates, and whether any countries, products, or companies would be exempt. Wednesday’s announcement, coupled with the news from December, suggests a light touch from the administration on chip imports, for now.
Trump last year announced he would allow Nvidia to sell H200 chips to China in exchange for a cut of the sales of those chips. Legal experts questioned whether such an arrangement would violate the U.S. Constitution’s ban on taxing exports.
The Trump administration this week required that China-bound chips make a detour from Taiwan, where they are made, through the United States for testing by a third-party lab. When the chips enter the United States, they are subject to the 25% tariff announced Wednesday.
Nvidia did not immediately respond to a request for comment.
“We comply with all U.S. export control laws and policies,” AMD said in a statement.
TRUMP’S TARIFF BLITZ
Trump has deployed an array of tariffs aimed at bolstering American manufacturing, announcing in September sweeping new import tariffs, including 100% duties on branded drugs and 25% levies on heavy-duty trucks, triggering fresh trade uncertainty after a period of relative calm.
In April, the Trump administration announced probes into imports of pharmaceuticals and semiconductors as part of a bid to impose tariffs on them, arguing that extensive reliance on their foreign production poses a national security threat.
While U.S. companies like Nvidia, AMD and Intel design many of the most widely used chips, most are made overseas, many by Taiwan Semiconductor Manufacturing Co . TSMC did not immediately respond to a request for comment and the Semiconductor Industry Association also could not immediately be reached.
Trump, in the near future, may also impose broader tariffs on imports of semiconductors and their derivative products to incentivize domestic manufacturing, according to the fact sheet.
An annex to the order clarifies that any 25% tariff imposed on semiconductors under the order would not be stacked on top of the other tariffs imposed by the Trump administration under other Section 232 orders. They would be exempt from duties on copper, aluminum and steel, auto and truck parts.
Reporting by Ismail Shakil, Bhargav Acharya and Chris Sanders; additional reporting by David Lawder and Stephen Nellis; Editing by Caitlin Webber, Chris Reese and Diane Craft
